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Empirical analysis of the statutory derivative claim: de facto application and the sine quibus non

Gibbs-Kneller, D., Ogbonnaya, C. (2019) Empirical analysis of the statutory derivative claim: de facto application and the sine quibus non. Journal of Corporate Law Studies, 19 (2). pp. 303-332. ISSN 1473-5970. (doi:10.1080/14735970.2018.1527651) (KAR id:92866)


This article empirically investigates how the statutory derivative procedure is being applied de facto in comparison with the equitable procedure. Agency theory supposes that the corporate purpose is to maximise the value of the company by approximating the ‘efficient contract’ between the shareholders and directors. The derivative claim is one such way of doing so. However, an intractable tension exists between too much and too little litigation where there are inadequate private incentives relative to the corporate purpose. The equitable procedure did not incentivise litigation. The concern of the statutory reform was that an accessible procedure would create inadequate private incentives for shareholders to litigate. We do not find evidence that the statutory procedure is more accessible. We observed what we call the sine quibus non for permission. Shareholders are unlikely to meet these, creating little incentive to litigate and directors will continue to be incentivised to deter litigation.

Item Type: Article
DOI/Identification number: 10.1080/14735970.2018.1527651
Uncontrolled keywords: Derivative claims; shareholder rights; directors’ duties; shareholders; directors
Subjects: H Social Sciences
Divisions: Divisions > Kent Business School - Division > Department of Leadership and Management
Depositing User: Chidi Ogbonnaya
Date Deposited: 26 Jan 2022 09:58 UTC
Last Modified: 27 Jan 2022 12:01 UTC
Resource URI: (The current URI for this page, for reference purposes)

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